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2015 (11) TMI 1902 - PUNJAB AND HARYANA HIGH COURT
Suit for specific performance - application under Order 1 Rule 10 CPC made for impleadment of defendants - individual right over the property or not - HELD THAT:- In the facts of the present case, after dismissal of probate petition on 01.05.2010, right of Ranjit Singh-petitioner in the property owned by Swaran Singh is no longer in dispute. If he is made party to the suit, it will not enlarge the scope of the suit as there is no dispute with regard to his share in the property left by Swaran Singh after dismissal of probate petition. Since after being impleaded as party on an earlier application, he has filed his written statement and has led evidence, it would not amount to enlarging the scope of dispute.
Moreover, as per the judgments passed by this Court in Amrik Singh [2008 (12) TMI 835 - PUNJAB AND HARYANA HIGH COURT] and Smt. Sarita Devi Jain's case [2008 (12) TMI 836 - PUNJAB AND HARYANA HIGH COURT], it has been held that in a suit for specific performance, the vendor can only sell to the extent of his share in favour of vendee. He cannot sell the property/share of other co-sharers. With the dismissal of probate petition, the dispute between defendant Nos. 1 and 2 and the present petition has come to rest and in order to avoid multiplicity of litigation, the present petitioner should have been impleaded as party to the suit.
Reference, at this stage, can be made to the verdict given by the Hon'ble Supreme Court in Mumbai International Airport's case [2010 (7) TMI 1159 - SUPREME COURT], wherein it has been observed If the principles relating to impleadment, are kept in view, then the purported divergence in the two decisions will be found to be nonexistent. The observations in Kasturi [2005 (4) TMI 635 - SUPREME COURT] and Sumtibai [2007 (10) TMI 653 - SUPREME COURT] are with reference to the facts and circumstances of the respective case. In Kasturi, this Court held that in suits for specific performance, only the parties to the contract or any legal representative of a party to the contract, or a transferee from a party to the contract are necessary parties. In Sumtibai, this Court held that a person having semblance of a title can be considered as a proper party. Sumtibai did not lay down any proposition that anyone claiming to have any semblance of title is a necessary party. Nor did Kasturi lay down that no one, other than the parties to the contract and their legal representatives/transferees, can be impleaded even as a proper party.
In view of the law laid down by the Hon'ble Supreme Court and this Court in Mumbai International Airport Pvt. Ltd., Amrik Singh and Smt. Sarita Devi Man's case , this Court deems it fit that the petitioner is a necessary party to the suit and the application filed by him under Order 1 Rule 10 CPC should have been allowed.
The impugned order is set aside - Application allowed.
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2015 (11) TMI 1901 - PUNJAB AND HARYANA HIGH COURT
Mortgage of property - Requirement to discharge the debt - neither the petitioner nor his wife was impleaded as a party - HELD THAT:- Notice of motion be issued to the respondents, returnable on 09.12.2015. Dasti process as well.
The operation of the impugned order, qua the petitioners’ residential unit, shall remain stayed till the next date of hearing - To be listed as per Roster on the next date.
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2015 (11) TMI 1900 - PUNJAB AND HARYANA HIGH COURT
Grant of statutory bail under Section 167(2) of the Code of Criminal Procedure read with Section 36-A(4) of the Narcotic Drugs and Psychotropic Substances Act, 1985 - manufacturing and smuggling narcotic drugs as well as making illegal supply of the 'controlled substances' like pseudoephedrine within and outside India - recovery of 6kg 780gm pseudoephedrine and 2kg diphenoxylage powder from possession - HELD THAT:- It requires no elaborate discussion that having regard to the legislative object behind enactment of Section 167(2) CrPC is to ensure that an accused person must not be in any circumstances, detained beyond ninety days pending investigation of an offence punishable with death, imprisonment for life or imprisonment for a term of not less than ten years.
As regard to a person accused of an offence punishable under Sections 19, 24 or 27-A or for offences involving 'commercial quantity', in view of Section 36-A(4) of the NDPS Act, the maximum detention period pending investigation can be extended to 180 days.
The petitioner appears to be true while alleging that the investigating agency did not show the desired promptness in securing the FSL report of the samples sent on 16th and 23rd June, 2014 through special messenger. But then it cannot be overlooked that the Forensic Science Laboratory is not under the administrative control of Police Department and the delay in all probabilities occurred due to long queue of pending samples. The investigating agency therefore cannot be blamed entirely. Unfortunately, the learned Special Court has passed a totally casual order without elaborating the reasons which prompted it to grant extension to the prosecution to complete the investigation.
In view of the fact that (i) the Additional Public Prosecutor was competent to apply for extension of time; (ii) such an application was moved before expiry of one hundred and eighty days' period; (iii) the extension was sought before the petitioner applied for his bail under Section 167(2) CrPC and (iv) the fact that no charge-sheet could be filed for want of FSL report as it would have led to rejection of the charge-sheet itself, the petitioner (Varinder Sandhu) is not entitled to the benefit of Section 167(2) CrPC. His revision petition is accordingly dismissed.
So far as the petitioner's (Narinder Kumar Goyal) claim to release him on regular bail under Section 439 CrPC is concerned, it is true that he has been acquitted in some of the cases registered under the NDPS Act. However, having regard to the facts that (i) the petitioner has been found involved repeatedly in NDPS cases; (ii) he is currently facing trial along with Jagdish Singh @ Bhola in yet another case under NDPS Act registered by NCB Mumbai; (iii) he is alleged to be a close associate of the kingpin of drug mafia, coupled with the allegations attributed to him in the instant case, we are satisfied that none of the ingredients of Section 37(1)(b)(ii) of the NDPS Act can be said to have been satisfied. It is not expedient or desirable at all to release the petitioner on bail at this stage.
Bail application dismissed.
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2015 (11) TMI 1899 - SUPREME COURT
Murder - Refusal of the High Court to uphold the conviction of Daud Khan for an offence punishable Under Section 302 of the Indian Penal Code - FSL report falsifies the version of the eye witnesses - HELD THAT:- If the facts of the case are looked at individually and randomly, they might create a doubt. However, if they are considered collectively, there is no room for doubt. The facts collectively are: (i) Nand Singh was shot with a gun. (ii) The bullet extracted from the body of Nand Singh could have been fired from that gun, or to put it negatively, it cannot be said that the extracted bullet could not have been fired from the recovered gun. Nobody questioned this. (iii) The gun-shot was fired from a close distance, but there was no blackening of Nand Singh's skin possibly due to his apparel. Nobody questioned this. (iv) Nand Singh's death was not immediate and he could have traversed a distance of about 70 (seventy) feet despite being shot. Nobody questioned this. (v) The medical experts testified that spillage of blood from the entry wound is not inevitable and so it is possible that Nand Singh's blood was not found between the place of the incident and the place where he collapsed. The blood was, however, found where Nand Singh collapsed. (vi) There were five eye witnesses to the incident of shooting and they gave consistent statements and identified Daud Khan as the person who shot Nand Singh. None of these findings and conclusions are perverse. On the contrary, they have been accepted by the Trial Court and the High Court.
There are no reason to take a different view.
There are no hesitation in upholding the view taken by the High Court with regard to the offence committed by Daud Khan and his conviction for that offence - there are no substance in the appeal filed by the State and find no reason to reverse the conclusions arrived at by the High Court with regard to the offence committed by Daud Khan.
Appeal dismissed.
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2015 (11) TMI 1898 - BOMBAY HIGH COURT
Expenditure incurred on advertisement and sales promotion - Tribunal deleting the disallowance of 81.25% of the expenditure incurred as relying on of M/s. Star India Pvt. Ltd [2009 (3) TMI 990 - BOMBAY HIGH COURT] - as per revenue main liability to incur the said expenditure lay with the holding company of the assessee and that SLP filed by the Department has been admitted by the Hon'ble Supreme Court against the decision of this Court in the case of M/s. Star India (P) Ltd. relied on by the Tribunal
HELD THAT:- Revenue very fairly states that although the question as formulated proceeds on the basis the SLP filed by the Revenue against order of this Court in Star India Pvt. Ltd. (supra) has been admitted, in fact, it is not so. The Apex Court has only issued a notice before admission. In fact, the SLP is awaiting admission.
Be that as it may, no fault can be found with the impugned order of the Tribunal in having allowed the Respondent Assessee's appeal following the decision of this Court in Star India Pvt. Ltd. (supra). No distinguishing feature in the present facts from that existing in Star India Pvt. Ltd. (supra) has been pointed out to us which would warrant our taking a different view in the present appeal. No substantial question of law arise
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2015 (11) TMI 1897 - ITAT BANGALORE
Depreciation at 60% on telecom/computer equipment - 'whether telecom/computer equipment' cannot be classified as 'computer including computer software' - HELD THAT:- This issue is covered in respondent assessee's own case for the asst. year 2008-09 [2014 (9) TMI 45 - ITAT BANGALORE] held that a computer system would encompass a collection of devices including input and output support devices that perform functions including, but not limited to, logic, arithmetic, data storage and retrieval communication and control. CIT(A) has not erred in allowing the depreciation at 60% on telecom/computer equipment
Disallowance of deduction u/s 10A - assessee is not engaged in manufacturing and export of any article or thing or computer software as required for the purpose of computation of deduction u/s 10A - CIT(A) deleted addition - HELD THAT:- The issue is covered by the earlier order of this Hon'ble Tribunal in the assessee's own case for the assessment year 2008-09 [2014 (9) TMI 45 - ITAT BANGALORE] wherein as seen that the assessee satisfies the twin conditions of export of computer software and repatriation of exports proceeds in convertible foreign exchange as prescribed in section 10A of the Act. We, therefore, concur with the finding of the learned CIT (A) that the assessee is entitled for deduction u/s.10A.
Disallowance of deduction u/s 80JJAA - assessee is not involved in telecom services and such services cannot be termed as IT enabled services - CIT(A) deleted addition - HELD THAT:- As decided in assessee own case as the facts of the assessee in the case on hand are similar to the facts of the above cited case of Texas Instruments India P. Ltd. [2006 (12) TMI 405 - ITAT BANGALORE] deduction u/s.80JJAA of the Act is allowed on the basis of the following facts :-
i) The business of the assessee falls within the definition of the term "industrial undertaking"; ii) The assessee is engaged in providing Information Technology enabled services (computer software); iii) The assessee has claimed deduction of only those payments made to 'workmen' who are not employed in supervisory capacity.
In view of the above, we uphold the decision of the learned CIT (A) in allowing the assessee deduction u/s.80JJAA of the Act. Accordingly, the ground raised at S.No.3 by revenue is dismissed."
Disallowance of deduction u/s 35D - expenditure incurred on stamp duty increases the authorized share capital and is not an item of expenditure expressly allowable u/s 35D - CIT(A) deleted addition - HELD THAT:- This ground of appeal is restored to the file of AO with a direction to verify whether as a result of this expenditure, the share capital is increased or not. In case share capital is increased to treat the same as capital expenditure and if not, the share capital is increased to treat as Revenue expenditure.
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2015 (11) TMI 1896 - SUPREME COURT
Denial of right of defence or not - application of the accused rejected for getting exhibited the compact disc - HELD THAT:- In R.M. MALKANI VERSUS STATE OF MAHARASHTRA [1972 (9) TMI 150 - SUPREME COURT], this Court has observed that tape recorded conversation is admissible provided first the conversation is relevant to the matters in issue; secondly, there is identification of the voice; and, thirdly, the accuracy of the tape recorded conversation is proved by eliminating the possibility of erasing the tape record.
In view of the definition of 'document' in Evidence Act, and the law laid down by this Court, as discussed above, we hold that the compact disc is also a document. It is not necessary for the court to obtain admission or denial on a document Under Sub-section (1) to Section 294 Code of Criminal Procedure personally from the accused or complainant or the witness. The endorsement of admission or denial made by the counsel for defence, on the document filed by the prosecution or on the application/report with which same is filed, is sufficient compliance of Section 294 Code of Criminal Procedure.
The courts below have erred in law in rejecting the application to play the compact disc in question to enable the public prosecutor to admit or deny, and to get it sent to the Forensic Science Laboratory, by the defence. The Appellant is in jail and there appears to be no intention on his part to unnecessarily linger the trial, particularly when the prosecution witnesses have been examined.
The orders passed by the courts below are set aside - Appeal allowed.
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2015 (11) TMI 1895 - ITAT PUNE
TP Adjustment - working capital adjustment - as per Revenue was that no such working capital adjustment was claimed before the TPO and CIT(A) allowed the same without any verification - HELD THAT:- As order was passed by the TPO proposing an adjustment which was adopted by the AO while passing the order u/s 143(3) r.w.s.144C(4) - case of the assessee was that since the assessee was providing services to its associate enterprises, then it was working on lower prices for its services. On the other hand, if services were provided wherein the customers pays on later date, then the working capital adjustment is to be allowed to a company, which is providing the services on cash basis.
We find that similar issue of allowing working capital adjustment to the assessee has been held in favour of the assessee by series of decision on various in DCIT Vs. Emptoris Technologies India Pvt. Ltd. [2015 (10) TMI 738 - ITAT PUNE] - CIT(A) on the other hand had placed reliance on the decision in Vedaris Technologies Pvt. Ltd. [2010 (3) TMI 898 - ITAT DELHI] and the OECD Guidelines.
We find merit in the order of CIT(A) in directing the AO to grant working capital adjustment to the assessee on the basis of average credit/debit period for the year and commercial rate of interest. We find no merit in the grounds of appeal raised by the Revenue and the same are dismissed.
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2015 (11) TMI 1894 - ITAT RAJKOT
Unexplained investment in Gold and diamond jewelleries - jewellery found during search belonging to the assessee was less than 500 gms - HELD THAT:- Considering Assessee status and the normal practice in Hindu families as such, and as per the CBDT Circular No.1916 dated 11.05.1994 such jewellery cannot be treated as unexplained jewellery and added to the income of the assessee. See Ratanlal Vyaparilal Jain [2010 (7) TMI 769 - GUJARAT HIGH COURT] deleted the whole addition on the ground that the jewellery held by each of the family members was below the limits specified in the said circular.
Although the circular had been issued for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu society - unless the Revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained. Thus, the approach adopted in considering the extent of jewellery specified under the said circular to be a reasonable quantity, cannot be faulted with. Decided in favour of assessee.
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2015 (11) TMI 1893 - ITAT MUMBAI
Nature of expenses - software expenses - revenue or capital expenses - assessee is in the business of media planning, executing and buying in the field of advertising and marketing and other related services - HELD THAT:- We find that these software license costs which has been paid by the assessee is for using of software for its day-to-day business requirements, as stated by the assessee before the AO. These softwares keep are ever changing from time to time and did not have a useful life for very long period and at one point of time it becomes obsolete. Thus, it cannot be held that they are capital in nature on account of enduring benefit.
As decided in Asahi India Safety Glass Ltd [2011 (11) TMI 2 - DELHI HIGH COURT] and Raychem RPG Ltd, [2011 (7) TMI 953 - BOMBAY HIGH COURT] have held that, these softwares do not form part of the profit making apparatus and merely facilitate the assessee’s trading operation or enabled the management to conduct the assessee’s business more efficiently and more profitable. Thus, they have to be treated as revenue expenditure.
TDS u/s 195 - disallowance being the provision made for the expenditure to be reimbursed in connection with the software allocation cost by the foreign AE/group company, “Mindshare Asia Pacific” - AO observed that, such a payment on account of reimbursement of software cost amounts to “royalty” within the meaning of Explanation to section 9(1)(vi) and TDS should have been deducted by the assessee while making the payment - assessee contended that it is merely reimbursement of cost of software expenses incurred by the Group company which has been allotted to the assessee and is not a “Royalty” within the meaning of Explanation 2 to Section 9(1)(vi) - HELD THAT:- These softwares have not been developed by the Parent Company or any AE, but have been centrally procured so that same can be allotted and given to the various Group entities in order to ensure proper functioning; proper coordination and quality.
Whatever cost had been incurred for procuring the software from third parties has been allocated among the group entities on the proportionate basis. Such an allocation has not been disputed except for holding that the reimbursement of cost paid by the assessee to the Parent/ AE Company amounts to “Royalty”. Such a reimbursement of cost cannot be held to be for any transfer of any right or giving any right to use within the ambit and scope of any of the definition as given in Explanation 2 to section 9(1)(vi).
Once such a payment does not fall within any of the parameters set out in Explanation 2, then it cannot be held that, it is in the nature of “royalty”. ‘Mindshare Asia Pacific’ is procuring the software from somewhere else and loading the cost on proportionate basis to various group entities without any mark-up hence on reimbursement of such a cost, assessee was not liable to deduct TDS on account of “royalty” - Decided in favour of assessee.
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2015 (11) TMI 1892 - BOMBAY HIGH COURT
Admissibility of appeal - rebate claim - time limitation - HELD THAT:- The appeal raises substantial question of law. Present appeal is assessee’s appeal. It is admitted on the substantial questions of law - services waived on behalf of respondent.
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2015 (11) TMI 1891 - BOMBAY HIGH COURT
Admissibility of appeal - rebate claim - export of service - HELD THAT:- The appeal is admitted on substantial questions of law - The assessee waives service in all the appeals.
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2015 (11) TMI 1890 - ITAT AHMEDABAD
Characterization of receipts - Membership contribution received from its new members for life time in lieu of offering effluent disposal facility - AO taxed the entire sum in the impugned assessment year of receipt by following his line of action adopted in assessment year 2001-02, 2004-05 to 2008-09 thereby rejecting assessee’s accounting treatment treating the same as a capital receipt on the ground that it was yet to perform its part of obligation - HELD THAT:- It emanates from the case file that a co-ordinate bench of a tribunal in similar cross appeals [2015 (7) TMI 932 - ITAT AHMEDABAD for assessment year 2008-09 decided on 24-07-2015 remits back the issue of assessment of assessee’s above stated capital receipt contribution back to the assessing authority for reworking as per earlier order in assessment year 2001-02.
It further observes that the receipts received during the relevant accounting period are to be spread over for a period of five years instead of assessing the same in one assessment year. The second issue of enhancement stands decided against assessee. We follow suit in these facts and want of distinction being pointed out in the above stated decision. The assessee’s first ground accordingly is remitted back to Assessing Officer. Second substantive ground fail .
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2015 (11) TMI 1889 - KARNATAKA HIGH COURT
Seeking impunity from prosecution - public servants within the meaning of Section 197 of Cr.P.C - can be removed without the orders of the Hon'ble President of India or not - HELD THAT;- The complainant is a dismissed employee of BEML. The Division Bench of this Court headed by the then Hon'ble Chief Justice, while dismissing the writ petition filed against BEML of which complainant had represented the petitioners as his counsel observed that litigation is purely pursued out of personal motives.
The Apex Court in State of Haryana and Others v. Bhajan Lal and Others [1990 (11) TMI 386 - SUPREME COURT], listed 7 categories of cases by way of illustrations wherein power of the High Court under Article 226 of Constitution of India/482 of Cr.P.C. can be exercised either to prevent abuse of process of the Court or otherwise to secure the ends of justice - The case on hand fits in both 1st category and also 7th category in not making out prima facie even after accepting the facts alleged in its entirety and also for being malicious prosecution with personal motive. Even if the petitioners have violated the provisions under Section 205 of the Act of 1956 then also offence under Section 447 of the Act of 2013, cannot be brought home for the sole reason, that fraud is not to be seen from the alleged act.
The learned Magistrate while taking cognizance of the matter except epitomizing the complaint averments has not given independent application of his mind. As per Maksud Saiyed [2007 (9) TMI 400 - SUPREME COURT], the Magistrate has to carefully scrutinize the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.
Thus, it is fairly well settled that this Court under the extraordinary jurisdiction under Section 482 of Cr.P.C. quashing on going investigations/complaint or other proceedings to prevent abuse of process of law - petition allowed.
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2015 (11) TMI 1888 - ALLAHABAD HIGH COURT
Absorption of retrenched employees of Government or Public Corporations in Government Service - Calculation of the services of the absorbed employees rendered in the erstwhile department for the purpose of pensionary benefits - HELD THAT:- The provisions of Section 3 of the Rescission of Rules Act 2009 have obviously protected the interest of retrenched employees, who had not absorbed before 8 April, 2003 under the provisions of the Absorption Rules - Since Rescission Rules 2003 protected the benefit of pay granted to an absorbed retrenched employee prior to the date of commencement of Rescission Rules 2003 even after enforcement of Rescission Rules Act 2009, there is no reason to withdraw it. More so, the last salary drawn by the retrenched employees was also protected by means of Government Order dated 11 November 1993.
The matter of protection of pay scale as last drawn by the retrenched employees was considered by the Hon'ble Supreme Court in the case of Chittaranjan Sharma v. State of Himachal Pradesh, reported in [1996 (9) TMI 663 - SUPREME COURT], whereby the Supreme Court directed to maintain the pay scales of the absorbed employees in the event of their retrenchment. This has been followed by the learned Single Judge. Therefore, the findings given by the learned Single Judge as well as the directions issued to the appellants to give the consequential benefits to the respondents do not deserve to be interfered with.
Calculation of the services of the absorbed employees rendered in the erstwhile department for the purpose of pensionary benefits - HELD THAT:- The original petitioner has failed to produce any such rule, which would entitle him to claim the inclusion of his services rendered in the erstwhile undertaking for the purpose of pensionary benefits. The petitioner was retrenched from service of Auto Tractors Ltd., Pratapgarh. He was absorbed in the State Government service under the Absorption Rules 1991 in accordance with the terms and conditions provided therein. Absorption Rules 1991 do not contain any such provision as to calculate the period of service of the retrenched employee rendered in the erstwhile department for the purpose of pensionary benefits. Therefore, in the absence of a specific provision in the Rules, no such benefit can be provided by the Court.
Appeal disposed off.
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2015 (11) TMI 1887 - ITAT KOLKATA
Addition on account of trade creditors - Addition u/s 68 - HELD THAT:- All the parties have confirmed these purchase transactions but the AO wanted their creditworthiness. These are simply trade creditors and all of them supplied machinery to the assessee. Supply of machinery is not in doubt. These are not unsecured loans. Once this is the position, the AO cannot invoke the provisions of section 68 - All the parties have confirmed having made sales to assessee in response to notice u/s. 133(6) - In the case of trade creditors, at the best, first of all, the AO has to doubt the purchases and sales and without going into these facts, the AO applied the provisions of section 68 of the Act in the absence of creditworthiness of these parties and made addition.
No reason to sustain the same, as the very basis is not doubted by the AO, and assessee has discharged its onus by filing all the details before the AO. Accordingly, we confirm the order of CIT(A) and this issue of revenue’s appeal is dismissed.
Addition of unsecured loans - HELD THAT:- As both the creditors have confirmed the transaction and also filed details of their assessment particulars and these credits are given out of their bank account but the AO did not carry out any exercise whatsoever to verify these unsecured loans as is clearly evidenced from the assessment order. Even CIT(A)’s finding is that AO has not conducted any further enquiry despite the fact that assessee has discharged its onus by filling the details. Once this is the position, we have no hesitation in confirming the order of CIT(A) and this issue of revenue’s appeal is dismissed.
Addition on account of purchase of spare parts - HELD THAT:- From the order of CIT(A), we find that complete details were available before him and on the basis of the same he has allowed the claim of the assessee. Even the sales arising out of the same purchases have not been doubted by the AO. Here in the present case only exception is M/s. Vishal Enterprises wherein it has not verified the veracity of the transaction. Hence, qua this only, we set aside the matter to the file of the AO so that assessee can prove the veracity of the transaction and for the balance purchases, we confirm the order of CIT(A) and this issue of revenue’s appeal is partly allowed.
Disproportionate payment of expenses made to persons specified u/s. 40A(2)(b) - HELD THAT:- AO has just made ad-hoc disallowance without going into the expenses or the reasonableness of the payment as mentioned in the provision of section 40A(2)(b) - Assessee has produced complete supporting bills and vouchers to prove the genuineness of the claim of expenditure which is not doubted but he has made ad hoc disallowance for the reason that these payments are made to the persons specified u/s. 40A(2)(b) of the Act for invocation of provision of section 40A(2)(b) of the Act. First of all, there should be a finding recorded by the AO that the expenses are unreasonable and how? But from the order of the AO, it is not coming out that what is the basis for disallowance. Just simply ad hoc disallowance cannot be made. Accordingly, we confirm the order of CIT(A) deleting the addition. This issue of revenue’s appeal is dismissed.
TDS u/s 194C - disallowance on account of truck hire charges for non-deduction of TDS - HELD THAT:- From the decision of Vipin Mehta [2011 (5) TMI 503 - ITAT MUMBAI] and the fact in this case is that the assessee has received Form 15- I from the respective payees to whom truck hire charges were paid, the AO has no authority to make any disallowance for non deduction of TDS u/s 40(a)(ia) of the Act. Accordingly this issue of revenue’s appeal is dismissed.
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2015 (11) TMI 1886 - ITAT DELHI
Reopening of assessment u/s 147 - Reason to believe - necessity of independent application of mind by AO - HELD THAT:- A plain reading of the reasons recorded demonstrate that the A.O. has not applied his mind to the material/information received from the Director (Investigations). Without such independent application of mind, it is not possible for the A.O. to come to a conclusion that he has reason to believe that income assessable to tax has escaped assessment. Thus, respectfully following the propositions of law laid down by the Hon’ble Delhi High Court in the case of Pr.CIT vs. G & G Pharma India Ltd. (2015 (10) TMI 754 - DELHI HIGH COURT] hold that the reopening is bad in law. Assessee’s appeal is allowed.
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2015 (11) TMI 1885 - PUNJAB AND HARYANA HIGH COURT
Suit for possession by way of specific performance of the agreement to sell on payment of balance sale consideration - HELD THAT:- It is held that the execution of agreement to sell to be duly proved. Plea of fiduciary relationship as pleaded by the defendants was rejected by the trial Court as well as by the Appellate Court. Execution of agreement to sell Ex.P1 was duly proved. The agreement to sell has been proved with reference to statement of scribe as well as of attesting witnesses. Passing of consideration to the tune of Rs.4,00,000/- has been proved with reference to the statement of attesting witnesses.
PW-1 Ajit Singh who is one of the attesting witness to agreement to sell Ex.P1 has specifically deposed about due execution of agreement to sell at the instance of defendants No.1 and 2. He has also endorsed the factum of passing of consideration worth Rs.4,00,000/- in the presence of witnesses Bikram Singh son of Sher Singh and the agreement to sell was duly scribed by Rana Partap Singh deed writer and defendants No.1 and 2 appended their thumb impressions admitting the contents of the agreement to sell to be correct - Bald statement of Gurmail Singh as DW-1 has not been taken to be sufficient evidence as against convincing overwhelming evidence led by the plaintiff. Gurmail Singh DW-1 took a plea that thumb impressions of the defendants No.1 and 2 were taken upon the paper already prepared by the plaintiff in collusion with Ajit Singh. In cross examination the witness even did not admit his signature upon which the alleged agreement to sell Ex.P-1 was scribed. The stand advanced by DW-1 Gurmail Singh was held to be contradictory with the stand taken in the cross examination. Either the alleged agreement to sell Ex.P-1 was not the said document stated by the defendant in his cross examination or the earlier account submitted by the defendant was not correct.
Bare perusal of Ex.P1 reveals that the stamp papers were purchased by DW-1 Gurmail Singh himself on 07.06.2003 from the stamp vendor but he miserably failed to examine the stamp vendor to prove the factum of his not visiting the stamp vendor for the purpose of purchasing the stamp papers in question.
Once the agreement to sell is proved, grant of decree is a natural consequence of the same, unless and until a case of hardship is pleaded by the defendants in terms of Section 20 of the Special Relief Act. Since no such hardship has been pleaded by the defendants in the defence, therefore, question No.2 has to be answered against the appellant. Question No.3 in the context of fiduciary relationship of the defendants with Ajit Singh has not been proved to the extent of discarding the case of the plaintiff which is based on lawful evidence on record. Particulars of fiduciary relationship have not been proved on record with reference to evidence, therefore, question No.3 does not arise at all.
Appeal dismissed.
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2015 (11) TMI 1884 - ITAT DELHI
TP adjustment u/s 92CA(3) - Pass-through costs/operating costs inclusion computing the ALP of the international transaction - HELD THAT:- All the costs in providing the services are to be borne by the assessee alone and the AE has no relation with that. The assessee has made out a case that the expenses incurred in providing such services to the tourists amounting to Rs.13.93 crore are pass through costs and hence the same be ignored in computing the ALP of the international transaction. We find this contention to ill-founded and devoid of any merit. Pass-through costs, in the context of transfer pricing provisions, are ordinarily the costs for which payment is made by an Indian entity to third party on behalf of its foreign AE and the amount so paid to third party is recovered from the foreign AE and in this process there is no assumption of risk of nonpayment by the foreign AE. These are non value-adding costs, which are incidental to the primary business activity of the assessee for which it neither performs any significant functions nor assumes any risks. That is the reason for which such costs are not considered as operating costs.
We fail to appreciate as to how the sum incurred by the assessee can at all be construed as `Pass through costs’ inasmuch as these are not the costs incurred by the assessee for and on behalf of FAB to be recovered as such, but are the costs to be borne by it alone. Such costs are direct charge against its revenue.
Pass-through costs do not involve any type of risk on the entity incurring them, as these are recoverable as such from its AE. At the cost of repetition, we reiterate that the assessee is liable to certain risks as discussed above, which has been noted from its own Transfer pricing study report. Under such circumstances, the argument of the ld. AR that a sum of Rs.13.93 crore represents pass-through costs is incapable of acceptance and ergo jettisoned.
Whether the ld. CIT(A) was justified in comparing the assessee’s net profit rate to total costs at 25.87% based on its service fees of Rs.71.54 lac minus indirect expenses of Rs.56.84 lac with the similar rate of two other comparable companies in determining the ALP of the international transaction of `Tours and Travel Related and Customer Handling Services’? - The international transaction as per the assessee’s audit report in Form No. 3CEB is `Tours and Travel Related and Customer Handling Services’ with transacted value of Rs.14.65 crore. This amount is a sum total of direct costs incurred in providing services amounting to Rs.13.93 crore and service fee of Rs.71.54 lac. This is the total amount received by the assessee from its AE. It is this international transaction of Rs.14.65 crore whose ALP is required to be computed. The action of the ld. CIT(A) has resulted in restricting the international transaction to a sum of Rs.71.54 lac, being the amount of service fee alone, which is again contrary to the statutory provisions. We, therefore, hold that both the direct and indirect cost are required to be considered in determining the ALP under the `Cost plus method’.
Action of the ld. CIT(A) in accepting the ratio of `Net profit to total costs’ as a profit level indicator has led to the devising of a new method in its own, which has no sanction of law. As the most appropriate method in this case is undisputedly the `Cost plus method’, we fail to appreciate as to how the decision of the ld. first appellate authority in accepting such a ratio as a Profit level indicator under this method can be sustained. The comparison of this ratio is alien to the Cost plus method.
Selection of only two companies is in sharp contrast to the assessee earlier choosing 14 companies as comparable in its Transfer pricing study report. By directing to do an analysis of `some’ and not `all’ the comparable companies, CIT(A) allowed the assessee to do cherry-picking by choosing only such companies which suit its purpose. Neither, there is an indication in the impugned order that the CIT(A) himself ensured that no comparable company was left out, nor did he ask the AO to find out other comparable companies. This has put the exercise done by the assessee during the course of first appellate proceedings, open to question.
AO has worked out addition by way of transfer pricing adjustment amounting to Rs.91.80 lac by applying the arithmetic mean of the ratio of `Net profit to Total costs’ of the comparables at 11.72% to the direct and indirect costs incurred by the assessee. As against this, the Cost plus method contemplates applying the ratio of `Gross Profit to Total costs’ and not `Net profit to Total costs’. Again to this extent also, the action of the AO is unsustainable.
In the given circumstances, we are of the considered opinion that the ends of justice would meet adequately if the impugned order is set aside and the matter is restored to the file of the AO. We order accordingly and direct him to compute the ALP of the international transaction afresh under the Cost plus method in conformity with our above discussion. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in such fresh proceedings.
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2015 (11) TMI 1883 - CESTAT ALLAHABAD
CENVAT Credit - capital goods or inputs - H.R.Coil, plates - G.P. Sheet Plain Plates - Steel Flats - Aluminum Coils - Shape & section etc. - HELD THAT:- These goods were used in repair/fabrication of machines or as accessories which are required for the purpose of manufacture of sugar. Further the Central Excise Tariff Act, 1985 has specifically indicated, the machines which are used for manufacture of sugar would fall under Chapter heading 84.30. This would indicate that all the machineries that are used in the sugar factory for the manufacture of sugar would fall under heading 8438.20 and eligible for Cenvat credit as capital goods. It that be so, any accessories spares or components used in the repair of manufacture or fabrication of machinery, which is further used for manufacture of sugar and molasses would be eligible for the benefit of Cenvat credit.
In M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX & THE COMMISSIONER OF CENTRAL EXCISE [2015 (3) TMI 661 - MADRAS HIGH COURT], the Hon’ble Madras High Court have held that M.S. Rod, Sheet, M.S. Channel/Plate/flat, etc, used for erection/fabrication of structural support for various machines like Crusher, Kiln, Hooper, etc, without which such structural, machinery could not be erected and would not function, held are eligible for Cenvat credit under Rule 2(a)(A) of CCR, 2004.
Appeal allowed - decided in favor of appellant.
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